The Regulation of Franchising in the New Global Economy
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The Regulation of Franchising in the New Global Economy

Elizabeth Crawford Spencer

While franchising promotes economic and social welfare objectives, Elizabeth Crawford Spencer argues that monitoring and regulation are needed to address potential areas of abuse of the form that can result in costly market inefficiencies.
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Appendix 2: Content of disclosure

Elizabeth Crawford Spencer

Extract

Appendix 2 Country Canada Content of disclosure Content of disclosure None of the Provinces’ franchise statutes specifically prescribe the format of a disclosure document, but they all prescribe the list of minimum information that must be provided. Regardless, all disclosure documents must contain all ‘material facts’, which is any information about the business, operations, capital or control of the franchisor, or its associates, or about the franchise system that would reasonably be expected to have a significant effect on the value or price of the franchise to be offered or the decision to acquire the franchise. The definition of ‘material fact’ is slightly different, but materially similar, among the Provinces. All four Provinces require the disclosure document to contain the franchisor’s prescribed financial statements which must relate to the franchisor and not its parent or associated companies. Such disclosure document must contain all material facts, including those facts relating to the matters specifically set out in the Franchises Regulation. ‘Material fact’ is defined as any information about the business, operations, capital or control of the franchisor or its associate, or about the franchise system, that would reasonably be expected to have a significant effect on the value or price of the franchise to be sold or the decision to purchase the franchise. In addition to copies of all proposed franchise agreements and financial statements, the disclosure document must contain reports and other documents in accordance with the Franchises Regulation. Under Schedule 1 of the Franchises Act, the disclosure document must...

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